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The government has imposed a severe administrative punishment on major truck maker Hino Motors, Ltd. after irregularities in the company’s quality inspections were found one after another. Because Hino’s ability to correct itself is seriously lacking, restoring public trust will not be easy.
In early September, the Land, Infrastructure, Transport and Tourism Ministry issued to Hino a corrective action order based on the Road Transport Vehicle Law after the company’s misconduct in engine performance tests was unearthed. This was the first corrective action issued since the measure was created in a revision to the law in 2019.
It is only natural that transport minister Tetsuo Saito strongly criticized the company, saying, “It is absolutely unacceptable that it continued to deceive the country and its people.” Hino must take the order seriously and make the utmost effort to strengthen its corporate governance and change the mindset of its employees.
In March this year, Hino announced it had tampered with data on engine performance tests for midsize and large trucks and buses. The company said it had replaced an auto part and manipulated fuel efficiency data during durability testing on exhaust gas emissions performance.
In August, a panel of outside experts found in an investigation that the company’s misconduct had been going on for about 20 years. At the time, Hino President Satoshi Ogiso said, “We will put into action our resolve and determination to be reborn.”
However, a subsequent on-site probe conducted by the ministry revealed that Hino had also tampered with engine data for small trucks. Exhaust gas emissions should have been measured at least twice in testing, but they were measured only once.
At one point, Hino was unable to ship all of its trucks and buses equipped with the engines in question. Why was the company not able to discover the irregularities until the ministry pointed them out? It is essential to clarify where the responsibility lies in order to ensure the prevention of a recurrence.
Harassment by superiors was rampant at the company, and its closed corporate culture made employees unable to speak up. This situation is believed to have made it difficult for the company to prevent the misconduct. Reform of such a corporate culture is also an urgent task.
The parent company, Toyota Motor Corp., which has sent many officials to Hino to serve as president, may need to increase its involvement in the management of its subsidiary. It is hoped that Toyota will provide Hino with its utmost support to establish a system for strengthening corporate governance and take other measures.
In the wake of the fraud, the ministry has revoked Hino’s certificates for many engine types, which is the authorization needed for mass production. The trucks and buses for which production has been suspended amount to about 40% of the company’s domestic sales, and the suspension is expected to continue until next summer.
The production halt has raised concerns over the impact on Hino’s business partners. A private credit research firm estimates that about 5,000 companies that do business with Hino could suffer annual losses totaling about ¥1 trillion.
A series of bankruptcies of Hino’s business partners needs to be averted. It is hoped that the government will consider taking such steps as strengthening support for them to raise funds from public financial institutions.
